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Constantinople - Round 2: ATM ETH CallsOn January 4th, we wrote a speculative trade piece for the January 16th Constantinople Fork. Today we will aim to replicate those trade ideas for the second attempt of the Constantinople Fork Implementation. According to the core developers, the fork will become effective on block number 7,280,000, which should occur on Feb 27th. When looking for opportunities in price movements on a SHORT-TERM thesis, one can use options to get long GAMMA, which essentially allows a trader to get highly leveraged exposure at a low-cost premium. Below is BitOoda’s Option Run, courtesy of KRM22’s ProOpticus software. This tool is an effective way for us to keep track of option values, and calculate the Greek’s that would be associated with any options structure priced up for our clients. When exploring opportunities for high GAMMA option plays, we shall look towards the March (3/29/19) options contracts, located in the left most column above. As you can see, the March $125 Straddle is worth ~$30. With the previous build-up, and ensuing let down of the first attempt at the Constantinople fork, we saw a price selloff from ~$155 to ~115 by the time the January options expired. The January $150 Straddle when we wrote our first Morning Report was also ~$30. This trade was a small winner (profited $5 from $30 premium = 16.67% ROI). We also recommended buying outright At-The-Money Calls or Puts if you had a conviction on price direction. As we saw, the Puts were spectacular, and the Calls were losers. For this second attempt at the Constantinople Fork, the core developers believe this round will go off without a hitch. If you believe in what they are saying, then buying At-The Money Calls would be your best options strategy here. If you have been following our Vol updates over the last few weeks, BTC vol has been extremely suppressed due to the lack of realized volatility in the space. The implied volatility (option values) should act similarly in ETH vol terms. The ETH H (3/29/19) $125 Call is worth roughly $12. If you can buy at the calls at this price, that would give you a break even up to $137. Viewing this ETH chart, we feel as though it is just ‘air’ up to ~$150. In other words, we don’t believe we shall see any RESISTANCE until that level as a rally could easily gap to that price. A Forking event in any protocol has taught us one thing; uncertainty and price volatility are sure to follow. Let’s use our past experiences and observations to take advantage of these opportunities for some speculative profits in a low-risk, high-reward manner.
COINBASE:ETHUSDLong
by BitOoda_LLC
TRADE IDEA: OIH JULY 20TH 19 LONG/APRIL 20TH 26 SHORT CALLThis is a Poor Man's Covered Call, with the 90 delta July long call standing in as your stock, and the April 20th 26 short call functioning as it would in a covered call situation. Your max loss is the difference between what you paid for the long (currently 6.28 at the mid) minus what you received for the short call (currently .69 at the mid). Consequently, you pay a debit for this setup: 6.28 minus .69 or 5.59/contract. 5.59 is the max you can lose if you (a) do nothing with the setup; and (b) both the short and longs go to worthless on a finish of the underlying below the long strike at 19. 5.59 is also your cost basis in the long option. Look to exit the trade at 10-20% of what you put it on for (i.e., for a $56-$112 profit). This will occur along a neutral to bullish spectrum if either (a) price doesn't move much from here such that the intrinsic value in the long does not change appreciably over time and the short call value dwindles to worthless to (b) price shooting up and through your short call, at which point further increases in value of the long are offset by further increases in the value of the short, thus capping out further gains in the same fashion as would occur with a covered call. On break of the short call, wait toward expiry for the most of the extrinsic to bleed out of the short and then exit the trade as opposed to attempting to roll out the short call and/or strike improve. If the setup still has a "good look," re-up with a totally new Poor Man's. Intratrade, generally roll the short call out for duration and "as is" or to a similarly delta'd strike as the original short call on significant decrease in value (ordinarily, at 50% max). In the unfortunate event that this is no longer productive because price has pulled away from the short call too much, consider rolling the short call down to a reasonably delta'd strike (i.e., between the 20 and 30) while keeping an eye on your cost basis in the long in an attempt to ensure that it is always less than its current value.
AMEX:OIHLong
by NaughtyPines
ROKU - Iron Condor, short 3 day expirationROKU options are selling at a very high premium (time value) due to very high IV%. To take advantage of the high premium I opened an Iron Condor. I chose an iron condor because I don't have a strong bias (bull/bear). This strategy provides a little more cushion whether it moves one direction or the other. I would have chosen a credit spread strategy if I did have a strong bias. 3 Days till expiration. 56/66 Calls & 45/35 Puts. Premium $3.58 per spread. ROKU price at order execution $50.02 Break even $59.58 & 41.42 GREEKS D G T V Net Spread: .0034 .0400 -.0514 .0048 IV% on each contract is between 219% - 260% (versus 61%)
NASDAQ:ROKU
by JLJ002500
3
COP - Feb.'18 Exp. Put Vertical Debit SpreadTrade details: 57.5/50 Put Vertical Debit Spread @ $3.01 Prob. of Max Profit = 10.86% Prob. of Max Loss = 34.02% Break-even @ $54.49 50 D.T.E. Trade plan: Entry by overbought status + indication of correction/mean reversion analysis. Expecting pullback to moving average (VWMA) before earnings report in Feb.'18 for profit on weakening uptrend as seen in both Daily + Weekly charts. Expecting to take quick profit at $53.70 level + will re-establish position if quick profit is possible. Expecting to hold spread through earnings + allow spread to expire worthless if reversal is strong. Adjustment will be made if the position goes strongly opposite past $56.40 resistance level.
NYSE:COPShort
by AtoHoward
GOOG - Cautious Buy - Played via Selling Put Credit Spread GOOG has closed upwards of $1,054, forming a nice bullish candlestick! So, despite the great candlestick formation, there are some worrisome signs brewing in the Bond & Gold Markets, as well as in the Volatility Index. This means that if investors start heading towards safe havens like these, the stock market should take a pause and/or pull back. As a result, the way I decided to play this bullish to neutral stance of mine on GOOG, is by selling the $1,012.5 / $1,010 Dec. 15 Put Credit Spread (18 Days out) for $0.27 credit, or $27 per contract ($2,700 for a 100 lot). This means that based on the ThinkorSwim platform, this is a Delta 15 put spread, which simply implies that the options market assigns JUST a 15% chance that this option spread will be ITM (In The Money) by its expiration. In simple terms, it is highly unlikely that we will get our options assigned to us. To summarize, being long GOOG by selling this put spread, we stand to make more than 10% Return On Our Risked Amount in 18 Days and having an 85% chance that we will be right doing so! Pretty good odds for a really good return, in a short period of time! This way, we are allowing GOOG to drop MORE THAN $30 from its current levels and STILL be able to keep ALL of our premium. Close your position when GOOG hits $1,080 (Profit Target), or Exit the trade, if the spread increases to $0.40 (Stop Loss), for a 2R. Happy Trading Lindosskier
NASDAQ:GOOGLong
by lindosskier
OPENING: VIX JUNE 21ST 10/15/15/20 IRON FLY... for a 3.00 credit. I'm not seeing much else in the markets that meet my refined sense of pickiness, so putting on some VIX fly here using the June VIX futures price (14.73 at the time of this writing) to tell me where to sell the short straddle body of this setup. Metrics: Max Profit: $300/contract Max Loss: $200/contract Break Evens: 12.0/18.0 Theta: 1.39 Delta: 18.16 Notes: Like a short straddle, I'll shoot to take this off at 25% max.
TVC:VIX
by NaughtyPines
XOP: THREE BULLISH ASSUMPTION PLAYS IN ADVANCE OF OPEC TALKSWith XOP hanging around horizontal support here and with OPEC output cut extension talks and jawboning on the near-term horizon, it only makes sense to talk about petro plays with a bullish assumption, particularly due to XOP implied volatility rank (in the 74th percentile over the past six months) with background implied volatility at 34. Here are three: LADDERED SHORT PUTS/SHORT PUT VERTICALS The most straightforward of the strategies with a neutral to bullish assumption. Example: June 16th 33 short put July 21st 32 short put .97 credit at the mid These are currently setup at the 20 delta strike. Look to take profit at 50% max, either one at a time, or for the setup as a unit. Generally, no intratrade defense. Toward expiry, look to roll out for duration and credit on test. A defined risk variation on the nakeds, laddered short put verticals: Example: June 16th 30/33 short put vert July 21st 29/32 short put vert .64 credit at the mid As with the naked short puts, look to take profit at 50% max, either individually or for the setup as a unit. Generally, no intratrade defense. Toward expiry, look to roll out for duration and credit on test. POOR MAN'S COVERED CALL Example: Sept 15th 90 delta 28 long call/June 30th 30 delta 37.5 short call 7.28 db at the mid Here, you're looking to reduce cost basis in your back month, long-dated option over time by rolling your short call out for duration and credit. With these, look to take profit at 10-20% of what you put it on for, taking into account any credits you received for rolls. Intratrade, look to roll out the short call when it's lost 50% of its value. LIZARDS There are several variations, all of which involve receiving credit for the entire setup that exceeds the max loss that could be experienced by the short call side. Example (Naked Short Put + Short Call Vert): June 30th 34/37.5/38.5 Jade Lizard 1.10 credit at the mid BE at 32.90 (below expected move) Example (Short Put Vert + Short Call Vert): June 30th 31/34.5/37/38 1.02 credit at the mid BE at 33.48 (above expected move) Max Loss/Buying Power Effect: 2.48 Look to take these off at 50% max. Intratrade defense can be done by rolling the untested side toward current price to the extent it's productive. Toward expiry, look to roll the tested side out for duration and credit and to sell an oppositional side against for a credit that exceeds what you paid to roll, although it's generally just a walkaway trade if price blows through your short call side, since the max loss that can be experienced by that side will be less than what you collected in credit up front (i.e., all the risk associated with these is on the put side).
AMEX:XOPLong
by NaughtyPines
THE WEEK AHEAD: HPQ, LOW, BBY, GME EARNINGS; XOP, EWZ (NON)EARNINGS HPQ, LOW, BBY, and GME are all up for earnings announcements. Out of these, BBY and GME appear to be the best candidates for premium selling, given their implied volatility rank and background implied volatility metrics, although virtually every liquid underlying with an earnings announcement bears watching; implied volatility can pop at the last moment, making them ripe for a play. BBY announces on 5/25 before market open, so look to put on a play on the 24th before session close. Preliminary Setups: June 2nd 51.5 short straddle; 4.18 at the mid with break evens wide of the expected move at 47.32/55.68. June 2nd 44.5/51.5/51.5/58.5 iron fly: 3.69 at the mid with break evens at 47.31/54.69; 3.81 max loss/buying power effect. June 2nd 47/56 20 delta short strangle: 1.17 at the mid; BE's at or wide of the 1 SD at 45.83/57.17. June 2nd 46/48.5/54.5/57 30 delta iron condor: 1.03 at the mid; BE's wide of the expected move at 47.47/55.53; 1.47 max loss/buying power effect. GME announces on 5/25 after market close, so look to put on a play on the 25th before session close. Preliminary Setups: June 2nd 24 short straddle: 2.21 at the mid with break evens wide of the expected move at 21.79/26.21. June 2nd 21/24/24/27.5 iron fly: 1.88 at the mid with break evens wide of the expected move on the put side, slightly short of the expected on the call at 22.12/25.88; 1.62 max loss/buying power effect. June 2nd 22/26.5 20 delta short strangle: .65 at the mid with break evens wide of the expected move at 21.35/27.15. June 2nd 20/22.5/26/28.5 iron condor: .72 at the mid with break evens wide of the expected move at 21.78/26.72; 1.72 max loss/buying power effect. Due to the credits received for the short strangle/iron condor, would probably short straddle or iron fly. NON-EARNINGS The two exchange-traded funds with the metrics I generally look for: XOP and EWZ. I already have a non directional, defined risk EWZ setup on (an iron condor), so could look to add. With XOP, I'm looking at directional stuff (laddered short puts, laddered short put verticals, Poor Man's, or a setup with no upside risk, the concern being that OPEC will extend output cuts, causing this to rip skyward).
AMEX:XOP
by NaughtyPines
OPENING: VIX MAY 17TH 11/14/14/17 IRON FLY... for a 2.05 credit. This particular setup involves examining where the /VX futures price lies in the corresponding expiry to that of the VIX. Here, the May /VX price is closest to the VIX 14 strike, so that is where the body of the fly is set up. You then proceed to buy a .05 long put in the same expiry, and buy the long so that the wings are of equal length. Metrics: Max Profit: $205 Max Loss/Buying Power Effect: $95 Break Evens: 11.95/16.05 Notes: I'll look to manage at 25% max profit, as I would with any other short straddle or iron fly.
TVC:VIX
by NaughtyPines
OPENING: TLT JUNE 16TH 117/MAY 19TH 119.5 PUT DIAGONALGetting long bonds here via a net credit diagonal that I filled for a .01 credit. For diagonals and calendars, there aren't much in metrics to look at, since how much you make will depend on a wide variety of factors (i.e., IV, underlying price movement, etc.): Theta: 1.02 Delta: 7.24 Notes: The idea here is basically to reduce your cost basis in the long option with the short one. Here, the long cost .50 to contract to put on ... .
NASDAQ:TLTLong
by NaughtyPines
1